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Adexchanger Industry Preview 2016 Keynote Address Commissioner Julie Brill January 21, 2016

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Adexchanger Industry Preview 2016 Keynote Address Commissioner Julie Brill January 21, 2016 AdExchanger Industry Preview 2016 Keynote Address Commissioner Julie Brill January 21, 2016 Thank you for that kind introduction. It is a pleasure to be in New York, speaking at AdExchanger’s Industry Preview 2016. I know this may surprise you, but my agency, the Federal Trade Commission, has become “on fleek.” In our work involving advertising and tech, our issues have become fodder for some of the hottest comedy shows around. The very first episode of John Oliver’s “Last Week Tonight” included a “segment on dubious food advertising, starring POM Wonderful,”1 a pomegranate juice that promised to reduce the risk of heart disease, prostate cancer, and erectile dysfunction. David Letterman was inspired to create an entire “top ten” list of products the FTC had “rejected,” after he heard news of our $1.5 million settlement with two companies that marketed “caffeine-infused undergarments” as a weight-loss product. 2 Matt Stone and Trey Parker have also gotten in on the act, with a couple of recent episodes of South Park that took the ad blocking wars to new heights.3 They featured a world in the not too distant future where mankind struggles to block advertisements, leading ads to become stronger, and disguise themselves as news in order to survive. The hero of the story possesses a superhuman ability to distinguish ads from the news. He links up a girl whom he discovers is not fully human, but actually “Sponsored Content” for State Farm Insurance. Data Collection and Use in Advertising I’m not aware that the ad industry has in fact approached technological singularity – at least not yet. But it is clear that advertising has become one of the most technologically 1 See Laura Northrup, POM Wonderful Sends John Oliver Case of Dog Juice To Shove Up His Arse, THE CONSUMERIST (May 6, 2014), available at http://consumerist.com/2014/05/06/pom-wonderful-sends-john-oliver- case-of-dog-juice-to-shove-up-his-arse/. 2See CBS, Top Ten Other Products Recently Rejected By The Federal Commission, (Oct. 3, 2014), available at www.cbs.com/shows/late_show/top_ten. 3 See Jason Lynch, South Park Hysterically Satirized Ad Blocking and Sponsored Content ‘You can try to block ads, but they get smarter’, ADWEEK (Nov. 19, 2015), available at http://www.adweek.com/news/television/south-park- hysterically-satirized-ad-blocking-and-sponsored-content-168206; Lara O’Reilly, The latest episode of ‘South Park’ was about ad blocking and hard-to-distinguish native ads, BUSINESS INSIDER (Nov. 19, 2015), available at http://www.businessinsider.com/south-park-sponsored-content-ad-blocking-episode-2015-11. 1 advanced and data driven industries in our economy.4 More than ever, advertisers leverage data to reach customers, personalize experiences, and predict consumer behavior. Targeted advertising can be good for your business, for business in general, and for consumers. But these advancements raise significant concerns about consumer privacy and autonomy. While these are definitely 21st century conundrums, the principles the FTC employs to protect consumer privacy and choice date back over 100 years, to concerns first raised by Louis Brandeis. The FTC has long believed that consumers must be given reasonable notice and control over how their personal data is collected and used – and that applies regardless of how many zettabytes of data we are talking about. A newly emerging form of tracking uses sensors to track customers’ mobile phone signals to detect individualized or aggregated traffic patterns about consumers as they travel through stores and malls. The amount of data collected and the uses for the data can vary, and so do the privacy challenges the practice raises.5 For instance, a retail mobile location tracking service might not track data that is unique to a device or user, or it might immediately aggregate the data collected without linking it to the user or her device. Retailers use this sort of aggregated information to improve their offerings and store layouts. Other retail mobile location trackers collect device level data to serve consumers with ads on their smartphones that might be relevant to them as they shop. At a bare minimum, it is critical that consumers are given relevant information about retail mobile location tracking when it is happening, and are able to exercise some control over its use. Without better communication to consumers, we may see a demand for apps that automatically disable transmission of signals upon contact with tracking networks.6 However, it is not enough that companies communicate with and provide choices to consumers regarding retail mobile location tracking. They must also be truthful about these choices. And that is where retail mobile location tracking company Nomi Technologies fell short, in the Commission’s view.7 Nomi’s privacy policy stated that it would “always allow consumers to opt-out of Nomi’s service on its website as well as at any retailer using Nomi’s technology.” The problem? For the first nine months of 2013 – during which time Nomi collected information about nine million mobile devices – the promised in-store opt-out mechanism was not available, and consumers were not informed when tracking was taking place. Nomi settled charges with the FTC that it violated the FTC Act by misrepresenting the choices that would be offered to consumers and the information that would be made available about retail location tracking. 4 Infographic, What Data-Driven Marketing Looks like in 2015: Consumer demand for personalization makes information most valuable currency, ADWEEK (Mar. 23, 2015), available at http://www.adweek.com/news/technology/infographic-what-data-driven-marketing-looks-2015-163607. 5 See Ashkan Soltani, Privacy Trade-Offs In Retail Tracking, FTC – TECH@FTC BLOG (Apr. 30, 2015), available at https://www.ftc.gov/news-events/blogs/techftc/2015/04/privacy-trade-offs-retail-tracking. 6 See id. 7 FTC, Press Release, Retail Tracking Firm Settles FTC Charges it Misled Consumers About Opt Out Choices (Apr. 23, 2015), available at https://www.ftc.gov/news-events/press-releases/2015/04/retail-tracking-firm-settles-ftc- charges-it-misled-consumers. 2 The issues surrounding tracking consumers are magnified when we consider further advances in technology. Recent studies from Berkeley8 and Princeton9 reveal that web tracking is getting more and more complicated and sophisticated. More companies place tracking cookies than ever before. And it’s not just cookies, which at least consumers can attempt to control: companies are increasingly using other methods, such as various device fingerprinting techniques and HTML5 local storage, to track users in ways that are harder to detect and make it harder for consumers to exercise choice. Companies are also creating integrated marketing profiles that track consumers across multiples devices, often supplementing these profiles with information from third-party offline sources. Two months ago, we hosted a workshop to examine privacy issues raised by cross- device tracking10 to hear from industry, consumer advocates and others about the technical aspects of these emerging technologies, as well as the benefits and risks to consumers associated with their use. We also discussed whether self-regulatory standards should apply to these techniques, and if so, whether they provide consumers with sufficient protections. As consumers interact across smart phones, tablets, connected TVs, and wearables, we face critical questions, and all of us have the responsibility to figure out how to make tracking more transparent and give consumers greater control. It is not clear that consumers are meaningfully informed about the cross-device tracking that’s happening even today. We reviewed the 20 top websites in five popular consumer categories to see whether consumers were being tracked across their devices and, if so, how the practice was described to them. We are still analyzing the data from our survey, but suffice it to say that we detected the presence of many third-parties that engage in cross-device tracking, and yet we didn’t see many disclosures about the practice.11 It is troubling that consumers are not provided with information and control over these often-invisible practices. The ad tech industry should be mindful that the Federal Trade Commission has pushed for more consumer control over third-party data collection online for over fifteen years. In 2010, we called for the establishment of a universal “Do Not Track” tool where consumers could opt out of cross-site data collection in their browsers.12 In 2012, at an event at the White House, major trade associations committed to finding a way to honor browser- 8 Ibrahim Altaweel, Nathaniel Good & Chris Jay Hoofnagle, Web Privacy Census, TECHNOLOGY SCIENCE (Jan. 15, 2015) available at http://techscience.org/a/2015121502/. 9Gunes Acar et al., The Web Never Forgets: Persistent Tracking Mechanisms in the Wild, ACM Conference on Computer and Communications Security (2014), available at https://securehomes.esat.kuleuven.be/~gacar/persistent/the_web_never_forgets.pdf. 10 FTC, Press Release, FTC To Host Workshop on Cross-Device Tracking Nov. 16 (Mar. 17, 2015), available at https://www.ftc.gov/news-events/press-releases/2015/03/ftc-host-workshop-cross-device-tracking-nov-16. 11 Justin Brookman, Presentation, What is Cross-Device Tracking? (2015), available at https://www.ftc.gov/system/files/documents/public_events/630761/cross-device_tracking_workshop_deck.pptx. 12 FTC, PROTECTING CONSUMER PRIVACY IN AN ERA OF RAPID CHANGE: A PROPOSED FRAMEWORK FOR BUSINESSES AND POLICYMAKERS at 66-68 (Dec. 2010) (Preliminary Staff Report), available at https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-bureau-consumer-protection- preliminary-ftc-staff-report-protecting-consumer/101201privacyreport.pdf. 3 based opt-outs by the end of that year.13 The World Wide Web Consortium – or W3C – standardized the meaning and operation of the “Do Not Track” mechanism last August.14 And yet, here we are, in 2016, and consumers still do not have an adequate means to opt-out of data collection.
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